Correlation Between Element Global and NN Group

Can any of the company-specific risk be diversified away by investing in both Element Global and NN Group at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Element Global and NN Group into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Element Global and NN Group NV, you can compare the effects of market volatilities on Element Global and NN Group and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Element Global with a short position of NN Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Element Global and NN Group.

Diversification Opportunities for Element Global and NN Group

-0.91

Correlation Coefficient

Element Global  NN Group

Pay attention - limited upside

The 3 months correlation between Element and NNGPF is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding Element Global and NN Group NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NN Group NV and Element Global is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Element Global are associated (or correlated) with NN Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NN Group NV has no effect on the direction of Element Global i.e., Element Global and NN Group go up and down completely randomly.

Pair Corralation between Element Global and NN Group

If you would invest  4,590  in NN Group NV on February 2, 2024 and sell it today you would earn a total of  78.00  from holding NN Group NV or generate 1.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	95.65%
Values	Daily Returns

Element Global  vs.  NN Group NV

Element Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Element Global has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain quite persistent which may send shares a bit higher in June 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

NN Group NV

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NN Group NV are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, NN Group may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Element Global and NN Group

The main advantage of trading using opposite Element Global and NN Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Element Global position performs unexpectedly, NN Group can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in NN Group will offset losses from the drop in NN Group's long position.

The idea behind Element Global and NN Group NV pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.